Opinion: Stockton’s Union Bailout Plan

This transcript has been automatically generated and may not be 100% accurate.

... the HIH ... the city of Stockton declared bankruptcy Monday ... that does the ruling set a very dangerous precedent ... I Wall Street Journal editorial page colleagues Elisa Finlay joins me now to explain ... we should be in bankruptcy it may be coming nebulous concept out there for view a curse ... of what is supposed to achieve ... basically it's also help the city or municipality ... restructure their debt to pay their bills ... and suss given some breathing room when I can say the town lost its okay so ... that's the best case at sites to post a work of the courses is California and nothing works the way they shouldn't ... I so yesterday had a judge say ok go ahead and declare bankruptcy stock in what was the catch ... the catch is that well ... the catch is that they don't want to do an evening about hands and that's the prob asset advising the big driver and there it that probably now I he's pensions in the hundred forty million dollar unfunded liability ... that they owe the California state employees retirement system that dwarfs any there and they're buying guide for these construction projects or freeze pension obligation bonds of The issued in two thousandseven two ... paper intend to write it so this is the problem was getting worse and worse and worse in so ... in a real bankruptcy provoke processor or the networks they would they would fix that and pensions would take ... a guess a haircut for a bit ... here they are ... a ... ton of other big received its business declares Bankruptcy yes that would normally happen ... on an unlisted have something that happened Chrysler ... of being a ... normal bankruptcy procedure ... or the structure of one takes a haircut and it all similarly situated creditors taking her ... meaning and value their of their own and the assets they hold these gains is reduced ... ok but here ... I it basically Stockton saying campaign bondholders you ... you take all the pain in our ... fire men they got compensated at these crazy pension payouts ... to just go in again on Monday ... as the crowd from foreign down the road ... well yes of course they irony is that this thing on our way through the unions they employees the very suffered enough ... I'll have any having suffered what what what they've done is they've reduced their ... pain but not really their base pay ... the women in these payouts for things like ... walking he can handle a keen eye and a literary nine nine nine percent in the mean as Sandy so we've got some of these listed I just wanna throw this up on the screen called an on pay categories says extra ... money that you get from the city of Stockton if you are keen on him or or or ... Wednesday we yet we cling percent at three wheeled ... motorcycle was that with this and try to get three percent warrior pension stock and if you write motorcycle basically a NK that since I ... didn't and that's how boring it is up ... um I so did the judges said this is that this is the deal ... aam but this doesn't salt Stockton's problems fracas they still have all these pensioners to pay ... that certainly that Dulaney Irwin made about a hundred twenty seven million dollars in debt with their posing ... even after they need me these concessions with the unions ... this'll I have a ten million dollar operating gets it going for the sake of ... our other ... bankrupt cities around America going to look at this judgment and saying ah ... we'll have to fix or pension problem fish oven on bondholders liking that's where headwinds from the Falling Stock NPCC actually what comes out because the sought after propose that ... every adjustment plan in the distance ... still must approve the readjustment ... it's only will we wait and see what comes out ... today the biggest shareholders is Calpers singers lark largest creditors Calpers ... on are they playing a constructive role here ... and they are a very happy with this case is they don't get their getting everything they want ... Umno cannot be helping situation and how are you a Calpers not helping the situation ... of bankruptcy in California it goes from bad to worse on the West